2023 (9) TMI 760 - HC - Income Tax

Return of cash seized by department u/s 132A - inaction of the Revenue in not even obeying and complying with the orders and directions passed by ITAT as well as PCIT - seeking direction to the Revenue to return the amount as seized together with interest for pre-assessment period as well as post-assessment period until the date of payment - seized gold were handed over but the cash was not returned - HELD THAT - As there has been an inordinate delay. Notwithstanding the order of the ITAT which attained finality on 25th September 2014, the Revenue did not consider it fit to return the cash of Rs. 2,60,000/- that was seized on or about 9th July 1996. Even after the PCIT passed the order on 31st December 2019 under Section 132B of the Act, the Revenue did not consider it fit to process and refund the amount. Even after the Petition was filed and served and the lawyer appeared for the Revenue, still the Revenue did not consider it fit to return the money. Therefore, in our case this is nothing but a clear case of high handedness on the part of the officers of the Revenue. This is a fit and proper case in which action should be initiated against all the officers concerned who were all in charge of this case at the appropriate and relevant point of time and particularly after 25th September 2014 and in any case after 31st December 2019 and most certainly after the Petition was filed and because of their inaction, Petitioner was made to suffer both financially and mentally. Admittedly, the amount of Rs. 2,60,000/- was to be refunded to Petitioner when the order dated 25th September 2014 passed by the ITAT attained finality. A copy of this judgment be forwarded to the Prime Minister s office and to Hon ble Minister for Finance for perusal and further appropriate action against erring officials on whose lethargic and adamant attitude the Department has to suffer financially. According to the computation of income tendered by Mr. Sharma, interest amount payable was Rs. 5,50,983/-. The Interest as on 24th September 2014 payable was Rs. 4,10,583/-. Any amount that is payable to Petitioner in excess of Rs. 4,10,583/- towards interest may be recovered from the erring officials together with interest thereon at 12% p.a. by the Government of India. Petitioner, therefore, will be entitled to interest at 12% p.a. for the post-assessment period, i.e., from 25th September 2014 until payment/realization.

Summary

Issues Involved:
1. Inaction of the Revenue in complying with ITAT and PCIT orders.
2. Entitlement to interest for delayed refund of seized cash.
3. Compensation for inordinate delay by the Revenue.

Summary:

Inaction of the Revenue in complying with ITAT and PCIT orders:
Petitioner approached the Court due to the Revenue's failure to comply with the orders of the Income Tax Appellate Tribunal (ITAT) and the Principal Commissioner of Income Tax (PCIT). The ITAT had decided in favor of the assessee on 24th September 2014, and the PCIT directed the release of seized gold and cash on 31st December 2019. Despite these orders, the cash of Rs. 2,60,000/- was not returned, leading to the Petition.

Entitlement to interest for delayed refund of seized cash:
Petitioner sought a direction for the return of Rs. 2,60,000/- with interest for both pre-assessment and post-assessment periods. The Revenue delayed filing an affidavit-in-reply, and when it was finally filed, the affiant blamed the manual record-keeping system for the delay. The affidavit indicated that the refund processing was transmitted to the Centralised Processing Unit (CPC) for verification. The computation form indicated an amount of Rs. 8,10,983/- to be paid, including Rs. 5,50,983/- as interest.

Compensation for inordinate delay by the Revenue:
The Court disagreed with the Revenue's argument that Section 244A(1A) did not apply to the refund of seized amounts, noting that Petitioner was entitled to interest due to the inordinate delay. The Court cited precedents, including the Supreme Court's decision in Sandvik Asia Ltd., which established that the Revenue must compensate for wrongful withholding of amounts. The Court emphasized that Petitioner was deprived of Rs. 2,60,000/- since 25th September 2014 due to the Revenue's inaction, which warranted compensation.

Judgment:
The Court found the Revenue's inaction unjustifiable and directed that Petitioner is entitled to interest at 12% p.a. for the post-assessment period from 25th September 2014 until payment. The Court ordered the amount to be credited to Petitioner's account within two weeks and suggested action against the erring officials. The Petition was disposed of, with the Revenue granted time until 30th September 2023 to make the payment.